The Tamil Nadu Generation and Distribution Corporation Ltd. (Tangedco) has not evolved any specific policy for importing coal, said a report of the Comptroller and Auditor General (CAG) on public sector undertakings for the year ended March 31, 2017.
“Before embarking on the import of coal on a regular basis, Tangedco did not consider the prevailing best practices in the industry to frame an import policy…this resulted in the fixation of higher levels of turnover criteria, which led to the elimination of small bidders from the competition,” the report said. It noted the State power utility did not adopt best practices such as e-tendering, reverse auction and invitation and evaluation of bids through the variable pricing method.
“Non-adherence to the variable price method led to avoidable expenditure to the extent of ₹746.13 crore,” the report added, noting a loss of ₹4.03 crore.
It noted that Tangedco had made payments to the supplier without obtaining the mandatory Certificate of Country of Origin in respect of 176 out of 297 consignments test-checked in the audit. The CAG said the power utility did not independently verify the accuracy of the gross calorific value (GCV) reported by the suppliers. This resulted in excess payment to suppliers to the extent of ₹813.68 crore. The price of imported coal depends mainly on GCV.
The report pointed out that the failure of Tangedco to recover the cost of transmission lines from the client as per the norms led to undue benefit of ₹12.75 crore.
due to its failure to correctly classify service connections under the industrial category, which resulted in undue benefit to customers, the CAG said.